TITLE
Recommendation to adopt resolution authorizing the issuance of bonds by the Long Beach Bond Finance Authority related to the prepayment of natural gas supply for a term of 30 years in an amount not exceed $1.3 billion; authorizing and approving contracts, agreements and other documents and actions relating thereto; and delegating authority to officers in connection therewith. (Citywide)
DISCUSSION
The Long Beach Gas and Oil Department (LBGO) operates California's largest municipally-owned natural gas utility (Utility). The Utility provides gas service to the residents and businesses of the cities of Long Beach and Signal Hill, along with small portions of several surrounding cities. As a gas utility, two of LBGO's primary responsibilities include reinvesting gas revenues into maintaining a safe pipeline delivery system and purchasing competitively-priced natural gas supplies on behalf of LBGO's 145,000 customers. LBGO anticipates challenges in meeting these responsibilities in the years to come based on status quo operations. Fortunately, LBGO has a recommended solution that will address these challenges to the benefit of LBGO's customers as well as the Utility.
Natural Gas Pipeline Infrastructure
LBGO's gas infrastructure includes 1,800 miles of underground pipeline, the bulk installed during the City's geographic expansion during the 1940s, 1950s, and 1960s.
Industry pipeline standards, as well as LBGO's own experience, indicate that gas pipeline begins to experience dramatically increased leakage when the pipeline exceeds 60 years of age. Increased pipeline leakage can pose serious public safety issues, and is extremely expensive to repair or replace on an emergency basis.
As such, LBGO recently began a long-term pipeline replacement program to replace the small percentage of remaining gas pipeline installed during the 1920s and 1930s, and will soon concentrate on the replacement of the 1940s pipeline. This program is being funded through the use ...
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